Australians lost over $260 million to investment scams in 2024, with Ponzi schemes responsible for a sizable chunk of that figure. While the mechanics of these scams are decades old, their methods have evolved, leveraging social media, crypto assets, and even AI-generated personas. As the cost-of-living crisis pushes more people to seek quick returns, it’s crucial to understand how Ponzi schemes operate—and how you can protect yourself in 2025.
What is a Ponzi Scheme and How Does it Work?
A Ponzi scheme is a fraudulent investment operation where returns to earlier investors are paid from the contributions of new investors, rather than legitimate profits. The illusion of success is maintained by a steady inflow of new money. Typically, these schemes collapse when it becomes impossible to attract enough new investors to pay returns, or when too many participants try to cash out at once.
In 2025, Ponzi schemes are cropping up across platforms—from traditional investment pitches to elaborate online networks. The core characteristics remain:
- Promises of high, consistent returns with little or no risk
- Pressure to “reinvest” earnings instead of withdrawing
- Lack of transparency about the underlying investment
- Difficulty accessing your funds or vague excuses for withdrawal delays
One recent case involved a Queensland-based operator offering guaranteed returns of 18% per annum via a “crypto arbitrage” strategy. ASIC shut it down after dozens of investors reported being unable to withdraw funds, with all payouts having come from new investors’ deposits.
The New Face of Ponzi Schemes in 2025
While the original Ponzi scheme dates back to Charles Ponzi’s postal coupon scam of the 1920s, today’s scammers employ digital tricks to appear more legitimate and scalable. In 2025, regulators like ASIC and the ACCC have flagged several new trends:
- Social media and messaging app recruitment: Scammers use platforms like WhatsApp, Telegram, and even LinkedIn to pitch “exclusive” investment opportunities.
- Crypto and digital asset schemes: With cryptocurrencies outside the traditional banking system, it’s easier for scammers to operate cross-border and evade detection.
- Deepfake videos and AI-generated testimonials: Some Ponzi operators now use deepfakes of celebrities or finance influencers to lend credibility to their schemes.
Earlier this year, a Sydney-based group ran a Ponzi operation disguised as a “blockchain lending club”, complete with a slick website and AI-powered customer service. Investors believed they were funding DeFi loans, but all returns were simply recycled deposits. The scheme unraveled after a viral TikTok exposé and an ASIC investigation.
How to Protect Yourself—and What to Do If You’re Caught
Staying safe from Ponzi schemes in 2025 requires a mix of skepticism, due diligence, and knowing where to report suspicious activity. Here’s how you can protect yourself:
- Check the licensing: Any legitimate investment provider should be listed on ASIC’s professional registers. Be wary of anyone who sidesteps questions about regulation.
- Verify returns: If an investment promises guaranteed returns well above the market rate, it’s likely too good to be true.
- Insist on transparency: Ask for clear, detailed explanations of how your money will be invested. Avoid schemes with secretive or complex structures.
- Don’t be rushed: High-pressure tactics are a red flag. Take your time to review any opportunity and seek a second opinion if something feels off.
If you suspect you’ve invested in a Ponzi scheme, act quickly:
- Cease all further payments and communication with the operator
- Report the scam to Scamwatch and ASIC
- Contact your bank or financial institution to see if funds can be recovered
- Connect with support networks such as the Australian Financial Complaints Authority (AFCA) or local consumer protection agencies
Recovery from Ponzi schemes is notoriously difficult, but regulatory action and class action lawsuits can sometimes lead to partial restitution—especially if the scheme is identified early and assets are frozen.
Ponzi Schemes and the Regulatory Response in 2025
Australian regulators are sharpening their focus on digital investment scams. In early 2025, ASIC and the ACCC launched a joint taskforce to target crypto-based Ponzi operators, with new powers to freeze suspect accounts and shut down fraudulent websites within days. The Federal Government is also considering amendments to the Corporations Act to close loopholes exploited by cross-border schemes.
Public awareness campaigns are ramping up, with Scamwatch publishing monthly scam alerts and working closely with social media companies to remove fake investment ads. While these moves are promising, the best defence is still a well-informed, cautious investor.
